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One criticism that cannot be made of HMRC at present is its reticence to publish Consultation Papers. Whether it takes any notice of the product of the consultation is another matter, but at least by publishing them we get to know first hand about their current views.

All of the current crop of papers need to be read not merely for their content on the topic covered, but as demonstrating (I was thinking of using the word “betraying”, but perhaps that is unkind) the current views and underlying thinking held within HMRC. The short paper, “Purpose, Vision and Way” contains some matters of moment and concern.

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Before I am accused of taking selective and unrepresentative extracts from the Paper I acknowledge that I am doing so but, in my view, this does not make the points I wish to make any the less valid. Indeed, arguably it highlights the problem areas.

Function/Purpose

I have two issues with “Purpose, Vision and Way”. The first is where HMRC state that one of their functions is making sure that “the money is available to fund the UK’s public services” and helping “families and individuals with targeted financial support”. Really? Did you know that this was the purpose of HMRC? I did not. I thought their job was to administer the tax system by collecting in the most efficient, practical way all the tax that was due from we citizens to the State, not a penny less and not a penny more. I did not think that HMRC had any part in making money available to fund the UK’s public services. And precisely what does it mean by “public services”. Are they to pay the pensions contributions for civil servants? Are they to fund the wars in Iraq and Afghanistan? Are they to fund the National Health Service and the education system? Some of these? All of them? Something else?

Constitution

Is it constitutionally correct to say that HMRC have this role? Certainly collecting taxes makes money available for all of these things, but what business is it of HMRC to comment on the product of their activities? Surely they are supposed to hand over funds to the Government, probably operating in the guise of HM Treasury, and leave it to them to deal with what follows.

‘Binding Rules’

Secondly, the document refers to HMRC in their “relentless” pursuit of “those who bend or break the rules”. Precisely what are we to make of this statement? Certainly if rules are broken then HMRC should pursue those who break them. But bending rules is a different concept altogether. Who decides when a rule is being bent? HMRC? The tax payer or his agent? The courts?

Unfortunately this phrase, “bend the rules”, is symptomatic of another unwelcome development in our law. It is the distinction, wholly artificial and nowhere authorised by statute, of the distinction between “acceptable tax avoidance” and “unacceptable tax avoidance”. It would appear that the judiciary has been persuaded that there is such a distinction but where is the constitutional authority for this? Either an action is permitted by statute or it is not. Vague, politically inspired dogmatic statements like “bending the rules” or “finding a loophole in the legislation” are dangerous attacks on the rule of law which is both the basis of our constitution and also the first steps on a road that leads I do not like to think where.

Conclusion

HMRC need to be told at all times where their role begins and equally importantly, if not more so, where it ends.

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